The United States will provide USD 553 million for a port terminal being developed by Indian billionaire Gautam Adani in Sri Lanka’s capital, a move largely seen to curb China’s influence on Sri Lanka.

 
The financing from International Development Finance Corp (DFC) for the deepwater West Container Terminal in Colombo is the US government agency’s largest infrastructure investment in Asia, and among its biggest globally. DFC is a development finance agency launched under the previous Donald Trump administration to aid developing nations while advancing US foreign policy goals.

DFC said the investment will bolster Sri Lanka’s economic growth and “its regional economic integration, including with India, a key partner to both countries”.

The US agency will also be working with sponsors — John Keells Holdings Plc and Adani Ports and Special Economic Zone Ltd — relying on their local experience and high-quality standards.

This is part of the global acceleration of DFC investments that totaled USD 9.3 billion in 2023.

US’s involvement through the funding signals renewed efforts to loosen Beijing’s sway over Sri Lanka after Colombo splurged on Chinese port and highway projects before its economic meltdown last year. The move had left Colombo highly indebted to Beijing.

Also, India wants to tilt the balance of power in its neighborhood.

Last year, China invested about USD 2.2 billion in Sri Lanka, its biggest foreign direct investor.

The US has publicly criticized Sri Lanka’s little-used southern Hambantota port, calling it unsustainable and part of what it calls China’s “debt-trap diplomacy”. Hambantota port is one of the busiest in the Indian Ocean, given its proximity to international shipping routes. Importantly, nearly half of all container ships pass through its waters.

The DFC said it has been operating at more than 90 per cent utilization for two years and needs new capacity

The funding is also significant for the Adani Group as it has been fighting a raft of corporate fraud allegations leveled by US-based Hindenburg Research. Adani’s energy and port investments in Sri Lanka were criticized last year by some local lawmakers as opaque and closely tied to New Delhi’s interests.